Understanding Tractor Finance Terms: Balloon Payments, Residuals & GST
Finance contracts for tractors can look complex. Once you understand balloon payments, residuals and GST implications, you’ll be in a stronger position to choose the right structure.
1. Balloon Payments and Residual Values
A balloon payment is a lump-sum at the end of term that lowers monthly repayments. Residuals work similarly in leases—representing expected value at term end.
2. GST and Tax Considerations
Primary producers may claim GST credits, depreciation and interest depending on finance type. Leasing can allow full deduction of rental payments.
3. Matching Term to Asset Life
Ensure your finance term aligns with the tractor’s useful life to avoid paying for obsolete machinery.
4. Early Exit & Ownership Options
- Check for early repayment penalties.
- Understand ownership at end-of-term.
5. Bringing It Back to TractorFinancer
We help decode finance jargon and connect you to detailed insights at BK Nexus or apply through BK Brokers.